SynopsisA dispute over the rising price of scrap steel has brought steel re-rolling mills and ship-breakers to a standstill for seven days. The conflict has led to a shortage of raw materials for the mills, impacting production. While both sides emphasize the need for a swift resolution, they remain at odds over pricing. Small re-rolling mills, reliant on ship-breakers for scrap steel, face increased costs that could reach Tk 100,000 per tonne, forcing some mills to halt production. The situation calls for intervention to establish a fair price for scrap steel, reports The Daily StarArticleA heated disagreement regarding the escalating prices of scrap steel has plunged the steel re-rolling mills and ship-breakers into a week-long deadlock. This standoff has disrupted the supply of raw materials, causing significant challenges for re-rolling mills in sustaining their operations.The Bangladesh Ship Breakers and Recyclers Association (BSBRA) expressed their reluctance to sell steel, be it scrap or otherwise, at a loss. However, both parties underscore the urgency of resolving this issue swiftly, ideally through a constructive dialogue, to safeguard their business interests.The crisis emerged when ship-breakers unexpectedly raised the price of scrap steel from Tk 65,000 to Tk 68,000-Tk 70,000 per tonne, according to SK Masadul Alom Masud, the Managing Director of Shahriar Steel Mills Ltd. Ship-breakers went further by halting the supply of scrap steel, insisting on the new, higher prices.This situation is particularly challenging for small re-rolling mills, which rely on ship-breakers to obtain scrap steel. Due to their limited capacity to import scrap steel directly, these mills source their raw materials from ship-breakers at a premium, leading to significantly higher production costs.Alom emphasized that procuring scrap steel at ship-breakers' demanded prices could inflate production expenses to nearly Tk 1,00,000 per tonne. As a result, some small re-rolling mills have already ceased production due to capital shortages.In response, Alom called for the intervention of the tariff commission to establish a fair price for scrap steel.Rakibul Hasan, the Managing Director of Danyal Steel and Re-rolling Mills, highlighted that around 150 small-scale mills depend on re-rolling mills like his. He alleged that ship-breakers would continue to withhold scrap steel until their demand for higher prices was met.If ship-breakers persist in not supplying scrap steel to re-rolling mills, it will severely disrupt production and lead to financial losses, including the continued payment of salaries to around 12,000 workers in these mills who currently have no work. Additionally, the government stands to lose revenue in this scenario.Hasan pointed out that ship-breakers supply approximately 12 lakh tonnes of scrap steel, representing at least 15 percent of the raw material demand in the steel industry.Moreover, Hasan alleged that ship-breakers raised scrap steel prices abruptly and without engaging in negotiations.Md Arifur Rahman, the Managing Director of Padma Steel Re-Rolling Mills, revealed that ship-breakers had been providing scrap steel at Tk 65,000 per tonne for the past two months. They had adjusted prices in line with international market trends, reducing them from Tk 76,000 to Tk 78,000 per tonne.However, Rahman noted that ship-breakers unilaterally increased scrap steel prices a week ago without prior notice. Their explanation was a decrease in profit margins, from Tk 5,000 to Tk 2,500 per tonne, making their business unviable.In this context, re-rolling mills that depend on ship-breakers find themselves in a challenging situation.Md Abu Taher, the President of BSBRA, acknowledged that scrap steel prices had declined from Tk 75,000 to Tk 65,000 over the past two months, which was commercially unviable. As a result, ship-breakers raised prices to cover their losses.Taher, also the Managing Director of ship-breaking company Taher and Co., described the supply disruption as temporary and believed that negotiations with re-rolling mills would resolve the issue.Conclusion:The clash between ship-breakers and steel re-rolling mills over rising scrap steel prices has created a production impasse, affecting the steel industry. Small re-rolling mills, heavily reliant on ship-breakers for raw materials, face increased costs that threaten their operations. A speedy resolution through dialogue is essential to protect business interests and ensure a fair price for scrap steel. The situation highlights the need for interventions to stabilize the steel market and avoid disruptions.
SynopsisA dispute over the rising price of scrap steel has brought steel re-rolling mills and ship-breakers to a standstill for seven days. The conflict has led to a shortage of raw materials for the mills, impacting production. While both sides emphasize the need for a swift resolution, they remain at odds over pricing. Small re-rolling mills, reliant on ship-breakers for scrap steel, face increased costs that could reach Tk 100,000 per tonne, forcing some mills to halt production. The situation calls for intervention to establish a fair price for scrap steel, reports The Daily StarArticleA heated disagreement regarding the escalating prices of scrap steel has plunged the steel re-rolling mills and ship-breakers into a week-long deadlock. This standoff has disrupted the supply of raw materials, causing significant challenges for re-rolling mills in sustaining their operations.The Bangladesh Ship Breakers and Recyclers Association (BSBRA) expressed their reluctance to sell steel, be it scrap or otherwise, at a loss. However, both parties underscore the urgency of resolving this issue swiftly, ideally through a constructive dialogue, to safeguard their business interests.The crisis emerged when ship-breakers unexpectedly raised the price of scrap steel from Tk 65,000 to Tk 68,000-Tk 70,000 per tonne, according to SK Masadul Alom Masud, the Managing Director of Shahriar Steel Mills Ltd. Ship-breakers went further by halting the supply of scrap steel, insisting on the new, higher prices.This situation is particularly challenging for small re-rolling mills, which rely on ship-breakers to obtain scrap steel. Due to their limited capacity to import scrap steel directly, these mills source their raw materials from ship-breakers at a premium, leading to significantly higher production costs.Alom emphasized that procuring scrap steel at ship-breakers' demanded prices could inflate production expenses to nearly Tk 1,00,000 per tonne. As a result, some small re-rolling mills have already ceased production due to capital shortages.In response, Alom called for the intervention of the tariff commission to establish a fair price for scrap steel.Rakibul Hasan, the Managing Director of Danyal Steel and Re-rolling Mills, highlighted that around 150 small-scale mills depend on re-rolling mills like his. He alleged that ship-breakers would continue to withhold scrap steel until their demand for higher prices was met.If ship-breakers persist in not supplying scrap steel to re-rolling mills, it will severely disrupt production and lead to financial losses, including the continued payment of salaries to around 12,000 workers in these mills who currently have no work. Additionally, the government stands to lose revenue in this scenario.Hasan pointed out that ship-breakers supply approximately 12 lakh tonnes of scrap steel, representing at least 15 percent of the raw material demand in the steel industry.Moreover, Hasan alleged that ship-breakers raised scrap steel prices abruptly and without engaging in negotiations.Md Arifur Rahman, the Managing Director of Padma Steel Re-Rolling Mills, revealed that ship-breakers had been providing scrap steel at Tk 65,000 per tonne for the past two months. They had adjusted prices in line with international market trends, reducing them from Tk 76,000 to Tk 78,000 per tonne.However, Rahman noted that ship-breakers unilaterally increased scrap steel prices a week ago without prior notice. Their explanation was a decrease in profit margins, from Tk 5,000 to Tk 2,500 per tonne, making their business unviable.In this context, re-rolling mills that depend on ship-breakers find themselves in a challenging situation.Md Abu Taher, the President of BSBRA, acknowledged that scrap steel prices had declined from Tk 75,000 to Tk 65,000 over the past two months, which was commercially unviable. As a result, ship-breakers raised prices to cover their losses.Taher, also the Managing Director of ship-breaking company Taher and Co., described the supply disruption as temporary and believed that negotiations with re-rolling mills would resolve the issue.Conclusion:The clash between ship-breakers and steel re-rolling mills over rising scrap steel prices has created a production impasse, affecting the steel industry. Small re-rolling mills, heavily reliant on ship-breakers for raw materials, face increased costs that threaten their operations. A speedy resolution through dialogue is essential to protect business interests and ensure a fair price for scrap steel. The situation highlights the need for interventions to stabilize the steel market and avoid disruptions.
